Consumption expenditure = $180 b

Planned investment = $30 b

Government expenditure = $27 b

Export expenditure = $84 b

Import expenditure = $73 b

Autonomous taxes = $12 b

Income tax rate = 17%

Marginal propensity to save = 0.3

Marginal propensity to import = 0.1

Part (7)

Illustrate this economy using the aggregate expenditure model. On your diagram, identify the equilibrium level of income as calculated in part 6 and the actual level of income ($245 b). Identify as required the vertical distance that represents unplanned investment calculated in part 4. Ensure you label all axis and each component (line) you draw in your diagram.

Part (8)

Calculate the tax multiplier for the economy (solve to two decimal places).

Part (9)

Assume that the government decides to change autonomous taxes in order to achieve equilibrium income. Will it need to raise, lower or leave unchanged autonomous taxes to achieve this? If autonomous taxes do need to change by how much do they need to be raised or lowered for the economy to be in equilibrium (solve to two decimal places).